03 Financial Modeling · Equity Waterfall Builder · Step 4 of 7
Preferred returns & hurdles
The pref is what LPs earn on unreturned capital before any profit split.
Rate Imported from Stage 02 · Day count locked to Actual/365.
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BIBita asks
How should the preferred return accrue on each contribution?
Accrued pref, sample deal
| Contributor | Date | Capital | Days | Pref accrued |
|---|---|---|---|---|
| LP Class A | 2026-03-02 | $4,000,000 | 304 | $266,520.55 |
| LP Class A | 2026-06-15 | $2,000,000 | 199 | $87,232.88 |
| GP co-invest | 2026-03-02 | $300,000 | 304 | $19,989.04 |
| Total accrued (sample) | $373,742.47 | |||
Pref = capital × 8.0% × days ÷ 365. Synthetic example deal.
Advanced hurdles
IRR hurdleNot yet implemented
GP catch-upNot yet implemented
Multi-tier hurdlesNot yet implemented
Sample waterfall engine: dated contributions → return of capital → simple annual preferred return on unreturned capital (Actual/365) → residual split. IRR hurdles, GP catch-up and multi-tier waterfalls are not yet implemented. Illustrative only, not production-ready, not validated against your Excel workbooks.